February 22, 2017 / 10:18 AM / 6 months ago

CEE MARKETS-Bucharest stocks extend rally on Banca Transilvania gains

    * Bucharest stock index is highest since Jan 2008
    * Improved bank prospects buoy stock indices in CEE
    * Czech central bank reiterates guidance on crown cap

    By Sandor Peto
    BUDAPEST, Feb 22 (Reuters) - Romania's Banca Transilvania
 stocks surged to a record high on Wednesday in
continued reaction to expectations of growth, boosting the
Bucharest stock index in a reflection of general
optimism over Central European banks.
    The sector is emerging from a bad period marked with a jump
in bad loans after 2008, solvency woes in Slovenia and Bulgaria,
and increased costs from new taxes in Hungary and Poland and
schemes to convert Swiss franc loans into national currencies.
    Bank profits are rising across the region. In the latest
sign of improvement, the Bank of Slovenia reported on Tuesday
that the net profit of Slovenian lenders tripled last year.
    Bank shares have been a key driver of a rally in Central
European equities markets in the past weeks, also driven by a
global rise due to expectations for economic stimulus in the
U.S.
    Most of the region's markets took a respite on Wednesday
after robust gains on Tuesday.
    But Bucharest's index, which reached its highest levels
since June 2008 on Tuesday, extended its gains. It rose 0.9
percent by 0905 GMT, and was the highest since January 2008.
    Its gains were again driven mainly by the shares of Banca
Transilvania, which traded at record highs, rising more than 2.5
percent.
    Banca Transilvania shares have been rising since it reported
its results last week. Net profits fell last year after a
one-off surge in 2015.
    But investors are optimistic over the prospects of the bank,
which acquired Volksbank's unit in 2015, based on improved
indicators including the ratio of non-performing loans.
    Prague stocks rose by only 0.3 percent but that was
enough to set a new 15-month high.
    The Czech Republic holds a government bond auction on
Wednesday.
    The 10-year bond on offer may look attractive as its spread
versus Bunds has been recently restored to more than 30 basis
points from zero in January, Raiffeisen analyst Stephan Imre
said in a note.
    Czech debt assets have been made more attractive by the
widened spreads and speculation that the Czech central bank
could remove its cap on the value of the crown soon, letting it
firm past 27 against the euro, the analyst added.
    Czech central bank Vice Governor Mojmir Hampl reiterated on
Wednesday that the bank most likely to abandon its weak crown
policy around the middle of 2017 and it will not remove a cap on
the currency before the second quarter.
    The crown's implied rate in six-month forwards deals eased
to a one-week low of 26.848 against the euro.
    
              CEE        SNAPS   AT  1005          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            00     30     1%      %
 Hungary                 307.2  307.3   +0.0  0.53%
 forint                    000    650     5%  
 Polish                  4.293  4.297   +0.1  2.58%
 zloty                       0      9     1%  
 Romanian                4.515  4.516   +0.0  0.43%
 leu                         5      9     3%  
 Croatian                7.448  7.452   +0.0  1.44%
 kuna                        0      8     6%  
 Serbian                 123.7  123.8   +0.0  -0.33
 dinar                     600    600     8%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  977.4  974.4   +0.3   +6.0
                             1      7     0%     5%
 Budapest                34248  34324  -0.22   +7.0
                           .85    .99      %     2%
 Warsaw                  2248.  2248.   +0.0   +15.
                            64     52     1%    44%
 Bucharest               7983.  7912.   +0.9   +12.
                            92     64     0%    69%
 Ljubljana               765.1  765.6  -0.06   +6.6
                             6      5      %     3%
 Zagreb                  2214.  2225.  -0.51   +10.
                            05     48      %    99%
 Belgrade     <.BELEX15  710.4  712.0  -0.22  -0.97
              >              2      1      %      %
 Sofia                   610.2  610.5  -0.04   +4.0
                             9      1      %     7%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.50  0.004   +038   +3bp
              >              9           bps      s
   5-year     <CZ5YT=RR  0.189  -0.02   +070   +1bp
              >                          bps      s
   10-year    <CZ10YT=R  0.663  -0.01   +038   +0bp
              R>                    5    bps      s
 Poland                                            
   2-year     <PL2YT=RR  2.259  0.003   +315   +3bp
              >                          bps      s
   5-year     <PL5YT=RR  3.212  0.002   +372   +3bp
              >                          bps      s
   10-year    <PL10YT=R   3.86  -0.00   +357   +1bp
              R>                    6    bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.28   0.31   0.35      0
              PRIBOR=>                        
 Hungary              <   0.33   0.51   0.65   0.23
              BUBOR=>                         
 Poland               <   1.77  1.805    1.9   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Radu Marinas in Bucharest)
  
 
 

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